Players choose a stochastic choice rule, assigning a probability of “investing” as a function of a state. Players receive a return to investment that is increasing in the proportion of others who invest and the state. In addition, they incur a small cost associated with adapting the...

We study liquidity provision by dealers in a dynamic model of asset markets. When economic fundamentals are high (low), dealers provide more (less) liquidity by holding more (less) inventory, the market is liquid (illiquid), and interdealer trading is active (inactive). When fundamentals are...

We study information acquisition in a coordination game with incomplete information. To capture the idea that players can flexibly decide what information to acquire, we do not impose any physical restriction on feasible information structure. Facing an informational cost measured by reduction...